As someone who has taken quite a few funded trader evaluations and this last year has had pretty good success with passing (currently 4 funded accounts), I thought I’d pass on a few tips. These aren’t hard and fast rules, and obviously don’t guarantee passing. Though, in my own experience and journey in going from knowing nothing and failing horribly to passing multiple evaluations with multiple companies, I like to think I have a few tips I can pass on.
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Take Your Time
The biggest thing I used to do myself, and I see people mention over and over is they try to do a home run day, pass in 1 day, and coast the rest. That’s not real world trading unfortunately. Someone even went so far once as to message me and say “hey 10 days is too long for me, can you just give me one of your funded accounts”. There’s a lot of issues there, and of course not only was it a “no” it was a block as well.
The point being, if you don’t have 10 days to invest, how do you honestly think you will make a life long career out of trading? It’s a very long marathon, and not a sprint. But so many people want to make it a sprint to pass. If that is your mind set, you are going to blow up your funded accounts.
You have 10 to 15 days, minimum, to pass. You can take longer as well! Focus on making good trades and playing within the rules, instead of finishing as fast as you possibly can.
Also worth mentioning, we all have good and bad days, both in trading and in life. I’ve had days where I was off my game, just walked away from trading, and the next day was completely different. You have time on your side, use it.
There’s several ways to minimize your risk.
First, just because you can trade 5, 10, 15 contracts doesn’t mean you should. There’s a lot of variables, but I can guarantee if you go full clip (meaning all the contracts you are allowed), and a trade goes against you, it’s probably going to hurt. Things snowball quick in trading, when 1 bad trade turns into 2 or 3, chances are you’ve dug yourself a hole and probably aren’t in the best state of mind to dig yourself out.
Just ease in. This goes hand in hand with “Take Your Time”. You could very easily, with skill, pass an evaluation trading far less than the maximum. Also, I hate to tell everyone, but regardless of the rules during the evaluation (scaling or full clip from day 1), you will have a scaling plan once funded. So for example a 15 lot $150K account, when you get funded you are probably starting with just 4 contracts.
So that is minimizing risk by contract. You can also minimize your risk by having a fairly strict set of trading rules and sticking to them. If the daily loss limit on your account is $2,000, don’t push it that far, set a $1,000 (for example) self daily loss limit.
As well, use stop losses. And don’t let losers run. Again, my opinion, some people will say bad advice, and well, have fun with that.
Please Read and Understand the Rules
Okay, I wish this wasn’t a top 5 tip, but the amount of people I see post each week on forums and other groups that they failed because they broke a rule they didn’t know about is horrible. There are not that many rules! If you can’t figure out how to navigate like 5 rules, how on earth are you going to be a trader?
Read the rules, understand the rules. I have zero sympathy for people who break a rule and then complain.
Seriously, lets quickly run down what rules are in general. Now the specifics vary by company, but the rules in general will be:
- Daily Loss Limit – the most you can lose on any given day
- Trailing Stop Loss – there’s more to this, but another limit on how much you can lose
- Max contracts you can trade
- Times you are allowed to trade
- Products you can trade
Seriously, that’s it. Even “Products you can trade” is a softball rule since others won’t be available to choose. If you can’t handle these simple rules, like I said I’m not sure how you cut it as a trader. Bit of tough love from the CFT.
Keep in mind there’s other rules and criteria, but not that will bust your account. For example, there’s obviously a profit target to hit. Some programs have consistency rules. Again, you won’t fail because of them, but you damn sure better understand them.
All the information is pretty clear on each of the companies sites.
Don’t Expect A Straight Profit Line aka Manage Your Expectations
In trading you will have winning and losing days. You really have to be okay with accepting losers. One problem a lot of people (myself included originally) run into is they want every single day to be a winner, marching you towards the finish line.
Trading and reaching goals is never a straight line up each day. Sure, occasionally someone pulls it off, but at the end of the day, there’s no style points awarded in trading. How you get to the goal doesn’t matter as long as it doesn’t break a rule.
If anything it’s good practice to accept losing days, cut your losses so they are small, and move on to the next day.
To speak again of my own experience and what I do, with my own personal brokerage accounts I have a daily max loss set at the broker level. I can’t not modify this. If I hit it, I’m locked out for the day. Just having that amount in place makes me tread really lightly because I don’t want to be stopped out. But, if I hit it, I saved myself. Sure sometimes I do hit it, and guess what, my initial reaction is “damn it I really wish I could keep trading”, but I know that I got myself there, I’m probably not trading my best. Take the day off, and regroup for tomorrow.
Do something similar with your evaluations. Unfortunately there’s no way to hard lock yourself out if you hit your own daily stop loss, but using some discipline you can have one and stick to it.
Find Your Product
I see most people trade NQ and ES. Occasionally CL, and randomly other products. There’s a lot of products to choose from though, and they all behave differently. Different per-tick profit amounts, different volatility, different types of strategies work.
I started out wanting to be a Crude Oil trader, CL. It sounded sexy. I already had a several year long interest in the oil industry. It seemed like a natural fit.
After about 6+ months of trading crude oil and treading water at best, it finally dawned on me maybe, just maybe I should try trading something else. Now, I was fortunate that I stumbled onto the treasury products (bonds) like the 30 Year and Ultra Bond (ZB and UB). These products trade very, very different from CL. Bigger per-tick size, much slower moving, much bigger liquidity. And they just clicked for me. The way I naturally wanted to trade lended itself much better to treasuries.
I advise you find the product that appeals to you AND fits your trading style best. Just because most people trade ES and NQ doesn’t mean you have to. Spend some time, investigate the various products, their liquidity, their range, tick size and more. Plus side bonus, it’s far cooler to trade some obscure product than be another ES trader.
Bonus Tip 1: Do NOT Rely On Others To Call Out Trades – Actually Learn To Trade
Far too many people are looking for someone to spoon feed them success. I get far too many emails from people asking if I know of a good trading room where people are calling out trades. You are looking to basically make zero effort and just mirror other people.
Learn how to trade. That’s it. I really don’t have much respect for a “trader” who just wants to copy others. You aren’t a trader at all, you’re a parrot. And I know absolutely zero successful traders who are just copying others. You should want to master the art of trading. Learn skills, refine to fit your style, grow, learn from mistakes.
Bonus 2: Don’t Pay People Who Say They’ll Show You How To Pass
This isn’t so much a tip on how to pass, that’s why it’s a bonus. It’s a word of caution. Do NOT pay people who say they’ll teach you how to pass. Luckily I don’t see too many of these, but they are out there. Ever hear the saying “those who can not do teach”? That’s those people.
Think about it for a minute, if you are an ace trader making thousands, would you really be spending all your time coaching others? Maybe, maybe, in the distant future when you want to give back. But the 20 something year old who posts pictures of expensive homes and exotic vacations and says he’ll help you, you are the customer. He hasn’t passed anything.
There’s no magic bullet to make you pass. Each of us are on our own journeys. What was challenging for me might be easy for you, but other issues arise for yourself. Hopefully the tips above either directly helped, or put you in the mind set of wanting to figure out your own issues in passing and focusing on improving. Learn from your mistakes. But seriously, LEARN from your mistakes. Reflect on them. What will you change? How will you implement change? Work on being a great trader.
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Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.
Hypothetical Performance Disclosure:
Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect trading results.
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